Abelson on robo-signers last week:

“Truth is, bankers just can’t stand prosperity, even after their near-death experience of a couple of years ago, when so many of them, emphatically including the gargantuas, were kept alive only by grace of rich Uncle Sam generously ladling out our tax dollars. The nub of the problem were the lads and lassies assigned by the banks to review the mortgages and swear to the courts that everything was jake, as required by law before foreclosure received the necessary judicial blessing. They cheerfully signed affidavits to that effect, typically without bothering to actually review the documents or even having the faintest notion of what they were supposed to do.

The irony, of course, is that given the 16 million to 17 million unemployed or underemployed dying to work, the banks and their proxies could easily have gotten qualified folks to do the job. But instead, they chose to save a couple of bucks by hiring any number of unqualified “robo-signers.” It was either unbridled arrogance or simple stupidity—take your pick.

Ever since word got out about the first legal challenge to the legitimacy of such foreclosures, we’ve had the sinking feeling that the banks were once again in hot water. The action of their stocks last week when the story got some play in print and online did nothing to dissuade us from that bleak notion.

Neither we nor anyone else have the foggiest notion of how much damage this latest scandal will inflict on the banks or their investors’ net worth, but the hit, as intimated, could be substantial. And the ultimate effects on the economy’s most prominent invalid—housing—are bound to be baleful.

What is clear is that the banks should have paid the extra $2 an hour.”

Too funny, in a pathetic kind of way.

>

Source:
Courting Trouble
Alan Abelson
Barron’s OCTOBER 16, 2010
http://online.barrons.com/article/SB50001424052970204742304575546131193805368.html

Category: Employment, Foreclosures

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

21 Responses to “‘Should have paid the extra $2 an hour…’”

  1. farmera1 says:

    A good read from Business Week on the mortgage mess.

    http://www.businessweek.com/magazine/content/10_44/b4201076208349.htm

  2. wunsacon says:

    Why should the current bankers change? They screwed up many times over. Yet they and their bondholders were given record bonuses and bailed out again.

    Nothing will change until the TBTF banks go through bankruptcy. Just replacing a few head honchos won’t change anything either, because the culture of short-term-ism and incompetence will remain thru the rest of the ranks.

  3. Todd says:

    Sadly that’s goes for the rest of corporate america these days. Why pay for it today when you can pay for it later, if you get caught. The cost is only a little bit more plus penalties and you get you Bonuses off of those savings.

    The old adage for this is “you get what you pay for”

    My current response when asked about options is: Every decision as a cost, some costs are deferred plus interest.

  4. Until legislators have the courage to make such actions by bankers a criminal offense – and these actions surely quality – there is no incentive to stop. Profits now – bailouts later.

    The insanity of this system should be obvious to all.

  5. Bill W says:

    BR,

    In a recent interview, Cris Whalen seems to be saying that MBS investors are holding unsecured debt instead of secured debt, because of sloppy of record keeping.

    I take that to mean they will not be able to foreclose.

    I’m not a lawyer, but I tend to agree with your opinion that in the end, no one is getting a free house and debt holders will be able to take possession.

    Maybe what Cris means is that the whole thing is going to become litigious and messy. I imagine that would cost banks a significant amount of capital, and it would undermine the securitization process for years.

    My favorite part of the interview was his prediction that in two election cycles we will be rid of our current leadership (Both parties I hope.). I also think he made a great point about local governments telling home owners to pay property taxes instead of mortgage payments.

    Here’s the interview.
    http://www.creditwritedowns.com/2010/10/chris-whalen-us-foreclosure-crisis-a-cancer.html

    ~~~

    BR: See this Bloomberg interview with Chris; We were on Kudlow together here

  6. Tarkus says:

    “It was either unbridled arrogance or simple stupidity—take your pick.”

    The “stupid” cop-out is over. Especially for the largest banks where the “best and brightest” are.
    Everyone – and I mean Everyone – knows the whole mess was fraud. Only a heavy enough sack of money sitting on the heads of those on Capitol Hill keeps the lid on it.

  7. Jim Greeen says:

    I have always wondered about Germany in the 30′s, “where were the lawyers?, where were the lawyers?” Before the metastasis, where were the lawyers?? Couldn’t the lawyers have put the brakes on the abuse?

    Now I look around at America, Land of the Free and Home of the Brave and ask again where are the lawyers??

    The blatant disregard, that blatant trampling of one of our most fundamental rights we as citizens, all citizens, have is the right to Due Process. The financial side is leading the charge on this abuse.

    We even have a constitutional scholar, who just happens to be President, who you would think would be the most sensitive to this kind of judicial abuse. To my knowledge he has not said peep publicly about the apparent violations that have occurred inconjunction with another protected right, the rights of private property. He should be ashamed.

    There are those that say, who cares?, the abuses are not aimed at me, and who cares about a bunch of dead beats being evicted? I say it’s everything about honoring the rule of law that underpins our society.

    There’s a silent cry in America for real leadership. These are desperate times in many ways, and the lack of genuine political leadership from the very, very top exacerbates all the problem all the more.

    “Change we can believe in” my ass!!

  8. VennData says:

    What would like Obama to say?

    All anyone can do is let the courts handle it. If Obama said he would “Fix it” will the new GOP Congress let him? What would he “Fix?” He’s tried to keep people in their homes and the GOP says it’s not worked. What would you have him say that would make any difference.

    Just more partisan ramblings with no meaning.

  9. Jim Greeen says:

    Maybe he could acknowledge the abuse that appears to be going on for one. And as President assure the citizens that he will do everything in his power to insure those rights that are guaranteed to each citizen.

    We are talking about taking a leadership position, I say grow a pair and lead.

  10. Now this would quantitative easing we can all believe in: you just got your house for free, and now you can mortgage it up again.

  11. DisempoweredPaperPusher says:

    Even if you pay the robo-signers $100/hour you would still have to re-engineer the business process. Unless you dramatically ramp up the number of people working foreclosures the process would slow to a crawl.

  12. David G. Mills says:

    If only it was as easy as paying for good help. Unbeknown to most people, “securitization” radically changed the real estate system in America in critical and problematic ways.

    To begin with, prior to securitization, real estate documents were kept in a local county courthouse. All a person needed to be able to do was go to the local deed records and look up his/her property and discover who the lienholder was on his property. Prior to securitization, noteholders and other debtors were required to be the lienholders. The deed record of whom the leinholder was would tell everybody who the person/entity was who was owed money and who needed to be paid off to release any liens. The system was public and transparent.

    Securitization attempted to change all of that without legislative or court approval. Under the scheme of securitization created by these banks, the person/entity/noteholder who is owed money is not the lienholder any more. Under securitization, the lienholder becames a strawman called MERS. There is still a record filed at the courthouse; it just that this record doesn’t tell you what you need to know. If a mortgage is securitized, it is no longer possible to go to the deed records and find out who needs to be paid off to release a mortgage lien. All you can discover is that a strawman, MERS, holds the lien rights.

    If a mortgage is securitized, property owners, title companies and prospective buyers can no longer go to the public deed recording authorities and find out who needs to be paid off to remove mortgage liens. It is no longer a public, transparent system; it has became a private, secretive, trust me, system.
    This private, secretive system created by the banks and MERS was Taylor made for fraud. Now is anyone surprised that fraud in the real estate system is rampant?

    The Supreme Courts of three states, Arkansas, Kansas, and Maine have already decided that such a secretive system will not be tolerated in their states. Numerous bankruptcy courts have held that such a system is not acceptable to them either.

    Moreover, the problems with securitization don’t end there. Long established rules regarding commercial paper and negotiable instruments also created a problem of storage for the paperwork. Promissory notes are like currency; only the original document is valid (except in very rare cases and which requires detailed proof about how the note was lost or accidentally destroyed). Most of the time, a copy of a note is as worthless as a copy of a check, or a copy of a dollar bill.

    Promissory notes need to be kept in vault like conditions to preserve them. Proper storage was too much of a hassle and expense for the securitizers. So many of these notes were lost, or intentionally destroyed by people who ignorantly believed that copies of notes were just as valid as originals. So when banks and lenders were challenged by the courts to come up with original notes they had lost or destroyed, the banks and lenders began note counterfeiting. That’s right, counterfeiting. Counterfeiting notes is much easier than counterfeiting currency, because notes are not required to be put on special paper like currency is. So when you hear about mortgage lawsuits based upon “technicalities,” ask yourself if counterfeiting is just a technicality.

    And this is just the tip of the iceberg. Securitization also did end runs around the established laws of trusts, contracts, and specific state and federal real estate laws.

    Who am I? Just an attorney of 33 years, who has filed his own lawsuit, regarding his own homestead, a year and a half ago. I am just hoping to get to an answer to the question of whether this new radical change in the American system of real estate, that was not set up beforehand by the legislature of my state, will be approved by the courts of my state, or whether the courts of my state will reject this system, as have many others.

  13. VennData says:

    “…Maybe he could acknowledge the abuse that …”

    Duh… you might want to acknowledge the media outside of FOX news rehashes

    Obama: Mortgage woes show Wall St reform crucial

    http://www.reuters.com/article/idUSN2220301020101023

    I’ll bet your one of those guys that doesn’t know Obama cut taxes for 95% of Americans too.

    If you parrot back the FOX news GOP nonsense. you will be embarrassed if you try to step outside your little conversation circle around the cracker barrel.

  14. Jim Greeen says:

    Traveling the last few days, missed the radio message or any mention of it. To that I concede the point that
    he has publicly, finally, come out with a statement on this issue.

    But why so personal?? I would be a little hesitant if I were you to extrapolate so much information from a single themed comment.

    But thanks for the heads up on the radio broadcast, it was needed.!!

  15. wunsacon says:

    VennData,

    Obama should’ve:

    - gone Swedish — punish the investors who support(ed) these banks and their practices, so that at least then these same freaking banks would not still be in charge and perpetuating this mess,

    - put Volcker in charge,

    - put Warren into the confirmation process to force the bankers’ reps identify themselves openly, and

    - hire thousands of lawyers and investigators to indict as much as 10% of the FIRE industry on RICO charges.

    It’s one thing to try and fail. It’s another thing not to try.

    And people recognize that. E.g., anytime I defended Obama in the past to certain people (e.g., cvienne), he basically says “Obama wanted the ball — but he’s not taking a shot”. Do you know what I say to that? Nothing. Because I *got* nothing.

    And I’m not even sure Obama is on “our” side when he makes apologetic statements for Wall Street, which you know he’s done.

    Is he worried about the way the GOP will distort everything? Sure. I understand. (Or think I do.) But, Team Obama have the biggest pulpit on the planet, especially now with the internet. If they want to defend/justify their position, people will learn about it despite the MSM.

    Obama even wants to continue / escalate our endless wars on “terror”, “drugs” (but not alcohol/tobacco/pharma), civil rights and continue just about every other policy that American politicians used to dig the hole we’re standing in.

    The status quo is not good enough. And it isn’t the “change” I was looking for.

  16. wunsacon says:

    …Hire Bill Black as our “Prosecution Czar” to direct those thousands of lawyers.

  17. GeorgeBurnsWasRight says:

    Rather than TBTF, banks are TBTC – Too Big To Care. Even if they’re fined billions of dollars, even if they pay out more billions to settle lawsuits, it still barely affects their bottom line. It’s asymmetrical warfare. What’s a big settlement for the government or a litigant is peanuts to the big banks.

  18. MikeG says:

    Cheap, mean and mediocre- sums up corporate America in a nutshell. As one who has dealt with offshore tech support frequently, this is commonplace. Arrogant executives who pay themselves fortunes will nickel-and-dime over paying up for qualified people to actually do the work.

  19. AndyC says:

    Wall Street Errors

    Its cupidity, not stupidity and that’s a totally different idity

  20. ashpelham2 says:

    The problem with trying for change in this country is that everyone CHANGE is running against are all bankrolled by the big boys. I’m talking about Obama. He, at one time, might have represented something more akin to a real American, not a career politician or bankster. That’s out the window, starting about 18 months before he got elected, and accelerating into and past the inauguration.

    I’d run, as I’m 35 now and eligible to run for President, and I’d run on the premise of real CHANGE. But the people running against me and funding them would EAT ME AND MY CHILDREN ALIVE.